A New Protection for Americans with Pre-Existing Conditions?

A theme you may have detected from my previous post is that much of what the GOP has proposed in its latest plan to replace the Affordable Care Act (ACA) is already contained in the ACA itself. The difference is that the GOP proposal tends to water down the substance of the ACA. It’s a bit of an attempt to have one’s cake (appear to retain popular aspects of the ACA) and eat it too (subtly alter those provisions in ways that significantly undermine the original reason for their inclusion in the ACA). Today’s topic is no exception.

A theme you may have detected from my previous post is that much of what the GOP has proposed in its latest plan to replace the Affordable Care Act (ACA) is already contained in the ACA itself. The difference is that the GOP proposal tends to water down the substance of the ACA. It’s a bit of an attempt to have one’s cake (appear to retain popular aspects of the ACA) and eat it too (subtly alter those provisions in ways that significantly undermine the original reason for their inclusion in the ACA). Today’s topic is no exception. Senators Burr and Hatch along with Representative Upton write “Under our plan, no one can be denied coverage based on a pre-existing condition.” That sounds a lot like the ACA. But there’s a major difference, which is that under the ACA, the phrase “no one” literally means “no one,” while in the Burr-Hatch-Upton proposal it means “no one who is continuously enrolled in a health plan offering at least catastrophic coverage following a one-time open enrollment period.” Let me explain.

Individuals with a pre-existing condition are expected to use more health care. That means that, at a minimum, health insurers charge them substantially more for coverage. In some cases, they were charging them so much that it essentially priced the coverage out of the individuals’ reach. In other cases, the health insurers simply said “we refuse to issue you a policy.” Now, that could happen in a couple of different ways. First, you could be uninsured, have a medical condition, and be denied coverage, or second, you could be insured, develop a medical condition, and have your coverage renewal denied. In either case, you went without insurance because you were sick. There was also the issue that people who left or lost their job might end up unable to get new coverage. To help with that, Congress enacted the Health Insurance Portability and Accountability Act (HIPAA), which allowed people to remain covered when switching jobs, as long as they maintained continuous coverage. At the time, the provisions contained in HIPAA were a definite step forward, but they were limited to individuals with group coverage and did nothing to help people who for a variety of reasons had–or wanted to have–coverage via the individual market.

The ACA made “guaranteed issue” the law of the land, meaning that no insurance company could deny anyone coverage because of a pre-existing condition. Of course, the laws of health economics require that if insurers are obligated to “guaranteed issue”, individuals must be required to purchase a plan–even if they are healthy. Otherwise, people would wait until they got sick and “needed” insurance, knowing that they could not be denied coverage. It doesn’t take a rocket scientist to understand that that would drastically drive up the cost of insurance, as people go from buying a policy they “might” need to buying a policy they know they need and fully intend to use right away.

Because guaranteed issue is popular, but the corresponding individual mandate to purchase insurance is not (the public also loves to have it’s cake and eat it too), the GOP replace plan wants to move away from the ACA and back towards the HIPAA-style protections, which are less protective. In short, under the proposed plan, if you have insurance, you’d better make sure you keep it, because if you don’t, you may not be able to be insured again in the future. And, if you don’t have insurance, you’d better take advantage of the special “one time” open enrollment period envisioned by the proposed plan. If you don’t get covered then, the plan says that you would still be able to obtain coverage during an annual open enrollment period, but you “would not be able to avail [yourself] of the continuous coverage protections.” Translation: If you miss the boat, prepare to get soaked by the insurance industry.